Presumptive Taxation ITR | Section 44ADA | ITR Under 44ADA | What is audit limit for professionals

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Section 44ADA of the Income Tax Act, 1961, provides a simplified taxation scheme for professionals. It is aimed at reducing the compliance burden on small professionals by allowing them to declare their income on a presumptive basis. Here are the key features and guidelines of Section 44ADA:
Applicability

Professionals Covered:
It applies to professionals such as legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, and other notified professions.

Turnover Limit:
The gross receipts of the profession should not exceed ₹50 lakhs or 75 lakhs in a financial year 2023-24 (ay 2024-25).

Presumptive Income
Presumptive Rate: 50% of the total gross receipts or turnover is deemed to be the income of the taxpayer. No Further Deductions: No further expenses will be allowed as deductions. The 50% income is considered after all expenses.

Eligibility Criteria
Individuals and Firms: This scheme is available to resident individuals, Hindu Undivided Families (HUFs), and partnerships but not Limited Liability Partnerships (LLPs)

Maintenance of Books:
Professionals opting for this scheme are not required to maintain detailed books of accounts.

Audit Requirement:
They are also exempt from the requirement of getting their accounts audited under Section 44AB.

Advance Tax
Advance Tax Payment: Professionals opting for Section 44ADA are required to pay the entire advance tax liability by 15th March of the financial year.

Filing of Return
Form: The income tax return should be filed using ITR-4, which is designed for taxpayers opting for presumptive taxation schemes.

Important Considerations
Higher Income: If the actual income is higher than the presumptive income (50% of gross receipts), the higher income can be declared.

Opting Out: If a taxpayer opts out of the presumptive taxation scheme, they are not eligible to opt back in for the next five years.

Benefits
Simplified Compliance: Reduces the burden of maintaining detailed books of accounts and getting them audited.

Tax Efficiency:
Allows small professionals to pay tax on a presumptive basis, potentially lowering the taxable income.
Section 44ADA is particularly beneficial for small professionals who have moderate gross receipts and want to simplify their tax compliance.
Presumptive Taxation ITR | Section 44ADA | ITR Under 44ADA | What is audit limit for professionals
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